Sherlocking Startups And Other Small Firms

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May 25, 2012|Joyce Lain Kennedy, Career Q & A

DEAR JOYCE: Management lied to me about the company's financial stability when I took a new job in a startup. The firm went under three months later for lack of funding. Going to work for that company is the worst mistake I've made since I've been working. How will I know I'm not being lied to again? -- R.O.L.

DEAR R.O.L. -- The upside is that you could have squandered many more months in that fiasco. But you're right: The time has come in your career to get very serious about accepting potential job offers, especially those made by startups.

When historical data on a company doesn't exist, asking the interviewer such questions as, "How much capital is on hand?" and "How fast is it being spent?" isn't, as you've discovered, foolproof.

Try to snag a copy of the company's business plan and review it for probability of success with an accountant, venture capital banker or SCORE consultant (a volunteer who retired from the private business sector and is free to you, thanks to the U.S. Small Business Administration).

And see what you can deduce by foraging for management names on Google, LinkedIn and ZoomInfo.

EXPERT SLEUTHING TIPS. Finding out about publicly traded corporations is comparatively easy, says Jack Plunkett, who should know. "It's much harder to ferret out financial scoop on privately owned businesses where the great majority of jobs are found."

Plunkett, who heads Plunkett Research, Ltd. in Houston (plunkettresearch.com) is a top-of-the-line expert in digging out business and industry information. His company publishes many of the best industry guides available.

Plunkett says it's OK to politely ask about the source of a company's backing -- venture capital? Family owned? Angel investors? "If the company is heavily in debt, beware of potential financial instability," the ace researcher warns.

"Venture funding is OK as long as growth milestones are being met. It is also reasonable to ask whether a company is profitable."

Plunkett identifies a good question to ask venture-backed companies: "What 'round' of funding has been achieved?" Why does this information matter? "Series A is a very early stage. Angel funding is even earlier, and risky from a job seeker's point of view. Early funding is no guarantee of future success," he explains.

Additional Plunkett tips to help you ferret out the real state of affairs in small businesses:

"Search online for solid reports about a prospective employer. Check The Business Journals (bizjournals.com) for companies of all types and VentureBeat (venturebeat.com) for venture-funded firms. Consider buying a credit report from Experian.com -- it might be the smartest investment you ever make."

If you're worried about spending 25 hours a day trusting-but-verifying the viability of startups and other small firms, Plunkett offers practical advice:

"To do a job search, there's no sense in trying to become a financial analyst on your own. Short-cut your task by choosing reliable references."

SMART VIDEOS. When you're looking at a new job or career and would like to glimpse what's around the corner, check out free videos to open your eyes. Plunkett's company has produced a five-six minute video for each chapter of his award-winning book, "The Next Boom: What You Absolutely, Positively Have to Know About the World Between Now and 2025."

The videos reflect heavy-duty research on such critical topics as demographic changes and globalization, as well as the future of energy, health care, nanotech, biotech and remote wireless sensors. View the videos at YouTube.com/plunkettresearch.

DEAR JOYCE: With all the educational scrambling to stay employed, have you been hearing from readers about their getting email spam from a company claiming it will award a master's degree in business administration in 30 days if recipients will pay $125 to cover handling and shipping costs? -- A.F.

DEAR A.F. -- No, I haven't. And as I think about it, the apparent absence of scam education spam is surprising because when the economy sweats, degree mills come out of the woodwork.

(E-mail career questions for possible use in this column to Joyce Lain Kennedy at jlk@sunfeatures.com; use "Reader Question" for subject line. Or mail her at Box 368, Cardiff, CA 92007.)